Marketers are always looking for benchmarks and averages so they’ll have some idea of what to shoot for when conducting and measuring their marketing campaigns. When it comes to Google AdWords, some benchmarks are easier to come by than others – for example, when asked “What’s a good click-through rate,” Google reps have recommended aiming for a click-through rate of 2-5%. But as for what’s a good conversion rate, it’s pretty much anyone’s guess – as least until now.
We recently conducted what we believe is the most extensive study of the economics of the Google AdWords model to date. By crunching data from our AdWords Performance Grader, which has analyzed over a billion dollars in aggregate spend, we were able to determine averages and benchmarks for top-level key performance metrics across the Google search and display networks, including conversion rate and cost per conversion. We also drilled down into the top 10 industries that spend the most money on Google advertising to determine industry benchmarks for AdWords conversion rate and more. Read on to learn what we found!
(Click to see the full-size infographic on Google AdWords metrics for Q3 2012)
Average Conversion Rates for Google AdWords Search and Display
In Q3 2012, the average conversion rate on AdWords for the search network was 5.63% across all industries and advertisers. The average conversion rate on the Google Display Network in Q3 2012 was slightly lower at 4.68%.
Keep in mind that advertisers have control over how they define “conversions” – while Google helped advertisers complete about 13 million total conversions per day through AdWords in Q3, not all conversions are defined as completed sales. Some businesses use AdWords to generate leads, and they may count a range of different activities as leads.
For this reason, it can be helpful to break out the average conversion rates by industry. Businesses within a given vertical tend to define conversion in similar ways. For example, in the finance and insurance industry, advertisers generally use paid search for lead gen, so filling out a form to “get a quote” or to contact the company would count as a conversion. In the shopping industry, on the other hand, conversions are more likely to be completed product sales.
Please note: These numbers are based on our own analysis and research – they are not official Google data. We analyzed data from 2,600 AdWords accounts, examining key metrics like the total number of number of clicks, impressions, costs, etc. between July 1, 2012 and September 30, 2012. When determining conversion rates, I ignored data for accounts that didn’t have Google conversion tracking enabled, which was roughly half the dataset. Click here for the full methodology of my study.
As with any benchmark data, it’s best to take these numbers with a grain of salt. They are based on averages of a subset of advertisers. Your mileage may vary.
Average AdWords Conversion Rates by Industry
Below are the average conversion rates on both search and display for the top 10 industries that spent the most on Google AdWords in Q3 2012:
Finance
Average conversion rate for the Finance Industry on Google Search: 6.12%
Average conversion rate for the Finance Industry on Google Display Network: 5.12%
Travel
Average conversion rate for the Travel Industry on Google Search: 1.45%
Average conversion rate for the Travel Industry on Google Display Network: 2.99%
Shopping
Average conversion rate for the Shopping Industry on Google Search: 3.58%
Average conversion rate for the Shopping Industry on Google Display Network: 2.19%
Jobs & Education
Average conversion rate for the Jobs & Education industry on Google Search: 6.09%
Average conversion rate for the Jobs & Education industry on Google Display Network: 2.09%
Internet & Telecom
Average conversion rate for the Internet & Telecommunications Industry on Google Search: 6.27%
Average conversion rate for the Internet & Telecommunications Industry on Google Display Network: 8.59%
Computers & Electronics
Average conversion rate for the Computers & Electronics Industry on Google Search: 4.79%
Average conversion rate for the Computers & Electronics industry on Google Display Network: 2.96%
Business & Industrial
Average conversion rate for the business & industrial industry on Google Search: 4.23%
Average conversion rate for the business & industrial industry on Google Display Network: 4.10%
Home & Garden
Average conversion rate for the Home & Garden industry on Google Search: 2.21%
Average conversion rate for the Home & Garden industry on Google Display Network: 3.43%
Autos & Vehicles
Average conversion rate on the Autos & Vehicles Industry for Google Search: 4.29%
Average conversion rate on the Autos & Vehicles industry for Google Display Network: 6.15%
Beauty & Fitness
Average conversion rate for the Beauty & Fitness industry on Google Search: 4.56%
Average conversion rate for the Beauty & Fitness industry on Google Display Network: 2.27%
Average Conversion Rates by Industry: Highlights
Here are a few interesting findings that stuck out to us about this data:
- The Internet and Telecom industry has the highest conversion rates on both search and display. Top advertisers in Internet & Telecom include AT&T, Sprint, T Mobile, Verizon and Comcast. Whether these companies are primarily using search ads to generate leads for mobile plans or whether they’re selling phones and other hardware, it appears that AdWords is working for them.
- The finance industry has the second highest average conversion rate – as well as the highest cost per click (CPC) of the bunch. Finance and insurance companies like State Farm, Geico, Quicken Loans, and Bank of America spend the most of any industry on Google search advertising and were also responsible for the highest number of complete conversions in Q3, with 1.39 million conversions through Google search and another 268K through the Display network.
- The travel industry has the lowest average conversion rate, at 1.45% on search. This could be because people tend to shop around a lot before pulling the trigger on travel purchases like plane tickets and hotel rooms. The largest advertisers in this vertical are Expedia, Hotels.com, Booking.com, Priceline and Kayak.
Check out the full infographic to see other average metrics by industry, including click-through rate (CTR), total clicks, cost per click and total conversions.
Average Cost Per Conversion on AdWords by Industry
Using the above average conversion rates as well as average cost per click data, we were able to determine the average cost per conversion on AdWords by industry as well. The average cost per conversion across all of Google is $9.41 for search and $7.26 for display.
The average cost per conversion figures for the top 10 industries in Q3 2012 are below:
Finance
Average cost per conversion for the Finance industry on Google Search: $50.49
Average cost per conversion for the Finance industry on Google Display Network: $20.12
Travel
Average cost per conversion for the Travel industry on Google Search: $20.00
Average cost per conversion for the Travel industry on Google Display Network: $9.36
Shopping
Average cost per conversion for the Shopping industry on Google Search: $6.98
Average cost per conversion for the Shopping industry on Google Display Network: $12.33
Jobs & Education
Average cost per conversion for the Jobs & Education industry on Google Search: $29.56
Average cost per conversion for the Jobs & Education industry on Google Display Network: $16.27
Internet & Telecom
Average cost per conversion for the internet and telecom industry on Google Search: $17.70
Average cost per conversion for the internet and telecom industry on Google Display Network: $4.66
Computers & Electronics
Average cost per conversion for the computers & electronics industry on Google Search: $29.02
Average cost per conversion for the computers & electronics industry on Google Display Network: $14.86
Business & Industrial
Average cost per conversion for the business and industrial industry on Google Search: $39.48
Average cost per conversion for the business and industrial industry on Google Display Network: $23.66
Home & Garden
Average cost per conversion for the Home & Garden industry on Google Search: $34.39
Average cost per conversion for the Home & Garden industry on Google Display Network: $24.40
Autos & Vehicles
Average cost per conversion for the Autos & Vehicles industry on Google Search: $22.61
Average cost per conversion for the Autos & Vehicles industry on Google Display Network: $16.75
Beauty & Fitness
Average cost per conversion for the Beauty & Fitness industry on Google Search: $24.34
Average cost per conversion for the Beauty & Fitness industry on Google Display Network: $44.49
Finance once again “boasts” the highest cost per conversion, at over $50 per. Business & industrial (with large advertisers like Staples and ULINE) has the next highest cost per conversion on search at $39.48. Note that for most industries, cost per conversion is lower on the display network, but not in every case.
So What’s a Good Conversion Rate on Google AdWords? What’s a Good Cost Per Conversion?
In general, aim to meet and then beat the average. If you work in one of the above “top 10” industries, use the industry-specific averages as a benchmark. If you work in another vertical, use the “across-Google” averages as your benchmark. As a general rule, a conversion rate between 5% and 10% is a good rate to aim for. If you work in the finance, Internet or another industry with high average conversion rates, aim for the higher end of that range.
A good cost per conversion will vary widely based on your particular business model and the lifetime value of a newly acquired customer. A cost per conversion under $10 is great – but many businesses can afford to pay much more than that for each conversion (sale or lead generated) and still get good ROI form paid search.
Find Out How You Compare to Other Advertisers In Your Industry
Still wondering how your own AdWords performance measures up? Find out the easy way with the AdWords Performance Grader. It’s a fast, free way to see how you compare to other advertisers in your industry and with similar budgets. Grade your account now!
This post originated on the WordStream Blog. WordStream provides keyword tools for pay-per click (PPC) and search engine optimization (SEO) aiding in everything from keyword discovery to keyword grouping and organization.